Competition: Good or Bad?

in steemit •  8 years ago  (edited)

"Competition" Does Not Mean "Zero-Sum" Competition

There is a common misconception that "competition" invariably means "zero-sum" competition. Win-Lose. This is epitomized within the article America’s Competition Fetish Produces Human Sheep. In it the person being interviewed makes many good points, but also some common logical errors. The interviewee’s argument is that from birth we are all competing with one another for stuff. We are told and shown that winning is everything, and losing is unacceptable, and the consequence of this education is the creation of un-creative sheeple. This is all, quite obviously, true. In an interview with PandoDaily from four years ago, Venture Capitalist (and founder of PayPal) Peter Thiel, made many of these same arguments.

What frequently follows this type of argument, however, is a condemnation of the concept of competition in economics (as seems to be the case in this article). “If,” the argument goes, “competition is bad, then all of these economists who say competition is good are wrong.” In the article it is stated thusly:

…classic economy theory [sic] tells you that a competitive marketplace is superior because competition provides a diversity of products which is good for the consumer, and it also, therefore diversifies risk. And yet, in this instance, competition has led every single one of these companies to copy each other…

Newsflash: Words Have Multiple Meanings

The interviewee ignores that within this paragraph the word “competition” is being used in two very different ways. In the first sentence it is being used as a synonym for “choice.” Choice is good for the consumer. If consumers don’t have choices, vendors have no pressure to deliver quality products at low prices. Competition on the individual level is not about choice, it’s about winning or losing. In other words it is zero-sum.


This is what zero-sum competition looks like

Competition in economics is not necessarily zero-sum, and the point Thiel makes is that if you want to start or maintain a successful company you shouldn’t pursue zero-sum competition, a position he advocates on the personal level as well (as would I). In other words, you want to avoid direct competition, or competition simply for competition’s sake, whether on the enterprise or individual level. The type of competition being discussed in the second sentence of the quote is direct/zero-sum competition. The companies (banks) were offering largely the same exact product (heavily regulated loans), therefore the only way to increase their loan portfolio was to take bigger risks by granting loans to people who might not be able to pay them.

Apple v. Google

On the other hand, Apple and Google compete (for example, in the smartphone business), yet both are highly profitable. In addition, their competition results in lower prices for the consumer. That’s win-win-win, not win-lose. Imagine if Apple didn’t have to worry about you purchasing an Android smartphone (for example, if Android didn’t exist), how much more do you think they would be able to charge for the iPhone? The only hope you would have for avoiding price-gouging would be if there was yet another competitor in Android’s place. In addition, the knowledge that there are competitors out there just waiting to snatch up their customers encourages them to keep striving to make ever improved products. As Nokia and then Blackberry demonstrated, market dominance can be a very dangerous thing.

Obviously competition in business can be zero-sum. Apple and Google’s success has meant the failure of companies like Nokia and Blackberry. But it’s hard to see how even zero-sum competition in this context is bad. Nokia/Blackberry’s phones weren’t nearly as good as either Apple’s or those using Google’s operating system (Android) largely because they failed to figure out how to attract application developers to their platform (not to mention poor hardware and software design). They should have been punished by the marketplace. How do you argue that competition is bad in this case? And what possible direction can that give you? "Competition is bad, therefore the fact that Nokia/Blackberry was out-competed is bad, therefore Apple and Google should not have been able to compete with them?" Obvious nonsense.

The reason Apple and Google can coexist in a market is because they have figured out how to compete in non-zero-sum ways. Apple uses its tight control over a closed ecosystem to make free/closed software (iOS) and hardware (the iPhone, iPad, iWatch, etc.) which it can sell for a profit. Google provides free/open software to hardware manufacturers (e.g. HTC, Samsung, Motorola) and uses the tight integration of its software tools (mainly search) to generate a profit. Nokia/Blackberry, on the other hand, pursued the same strategy as Apple. They made the hardware (the phones) and free/closed software (Symbian and Blackberry OS). Failing to beat Apple head-to-head meant that the companies failed too.

App developers flocked to Apple because they were first to market and they executed the hardware and the software well. Google recognized that it couldn’t compete directly with Apple because developers would never invest the resources to develop apps for a platform with a small market share. In order to attract developers to your platform you would have to figure out how to get your OS into a critical mass of phones (ideally equal to or greater than the number of iPhones). Investing in both hardware and software would have limited how many resources Google could put into either, thereby limiting their potential to disrupt the status quo.

How Google Avoided Zero-Sum Competition With Apple

Google’s solution was to largely abandon hardware altogether and to make their OS free and open. This solved two huge problems for manufacturers: 1. it allowed them to save the money they would have spent developing the software necessary to run these devices (software which would have to compete with Apple, and eventually Android too), and; 2. it allowed them to attract developers who could rest assured that their app would work on any phone running Android, not just those made by a single manufacturer. Finally they didn't have to fear competing with a behemoth (Google) in the hardware segment.

The Curious Case of Samsung

Samsung is an excellent proof-point. Only once it abandoned developing its own software and switched to Android for the Galaxy S line did its meteoric rise within the smartphone race begin. Somewhat ironically, the massive profits that resulted from that strategy provided the company with the resources to once again pursue alternate operating systems of its own (like Tizen), though time will tell whether this winds up being a winning strategy. In my opinion, however, Samsung’s success was temporary (as evidenced by the fact that their smartphone sales peaked in 2014) precisely because they compete too directly with Apple. Both their design and software features are still, in general, blatant Apple rip offs.

For a company with massive resources and engineering talent this should be deeply troubling. Since they have failed to demonstrate a consistent aptitude for hardware design and obviously lack sufficient software differentiation (the downside of using an open platform) they would be better served by focusing on remedying their hardware design deficiencies as well as developing unique features that run on Android (e.g. I have yet to see a viable AirDrop competitor on Android). I believe this would be a more productive use of resources than attempting to compete directly with Apple and Google with an OS.

GOOD Competition v. BAD Competition

The point being that there are different types of competition, some are good, some are bad. The competition (a/k/a choice) between Apple, Google, and Nokia is good because it insures that companies involved in making good phones are rewarded and the prices of their products are kept low. How those companies deal with competition on an individual level within their enterprises may very well have been (and probably was) part of the equation for their success. Perhaps Nokia fostered a zero-sum competition environment within the company. If the employees believed that in order for them to win one of their co-workers had to lose, and that in order for the company to win, one of their competitors would have to lose, this would guide all of their decision-making in a particular direction.

Instead of looking for creative ways of delighting their customers, they would instead focus on how they can sabotage their co-workers or their competitors. That this would lead to the company producing an inferior product should surprise no one. Whether this is what happened or not is unknown, however, what we can say for sure is that they did not foster the type of competition that led to the creation of successful products, and consumers (a/k/a the market) punished them for it. Apple, on the other hand, has a history of intentionally ignoring what other companies are doing (e.g. eschewing physical keyboards and opting for touchscreens) and focusing instead on delighting their customers. Meanwhile, within the company some competition between employees and teams was encouraged, which drove them to create hardware and software that consumers deemed valuable.

What TYPE of Competition Matters

The type and extent of competition that is fostered within a company is clearly important and nuanced. Feeling no pressure to create something which has value for the company is as dangerous as feeling all-consuming existential fear of failure. To assume that just because one word (“competition”) can be used in all of these circumstances, the same conclusion can be drawn for each instance (“competition is bad”) is frankly sophomoric and ignores the obvious reality that words can be used in very different ways. I certainly agree with the interviewee’s premise that promoting and obsessing over individual/zero-sum competition is an endemic (and epidemic) problem within our culture and the intentional teaching of such an approach should be immediately halted, however, unlike the author I think it is clear that competition between firms is certainly not the same thing, and in actuality serves as a check on individual competition because (as the interviewee herself admits) individual/zero-sum competition can be quite bad for firms.

Competition on Steemit

One of the many strengths of Steemit is that it is designed to foster non-zero-sum competition. Obviously there are many people who believe that in order for them to "win" on Steemit, someone has to lose, but in my own personal experience it is far more profitable to help others than to hurt them. First, the fact that the money isn't coming out of our wallet but is instead pulled from the ever-growing quantity of Steem means that giving to others does not mean taking from ourselves. Second, the curation rewards ... reward us for upvoting other talented individuals. If we follow them, continue to upvote their work, and they continue to grow and develop as an artist, we can all share in that growth. Finally, as effective holders of Steem (technically we only hold IOUs for Steem unless you actually hold Steem directly) what we all benefit from most is ever increasing demand for steem. Being the most rewarded content-creator on Steemit would mean nothing if the value of Steem was zero.

If you liked this post you might like my YouTube videos. Don't forget to Subscribe!

Authors get paid when people like you upvote their post.
If you enjoyed what you read here, create your account today and start earning FREE STEEM!
Sort Order:  

in my own personal experience it is far more profitable to help others than to hurt them. - andrarchy

Love that!
I live by this principle for years now and it only brought advantages!

It made me happy and it´ll make you happy!
I wish you success,
Chris

I don't agree with this graphic. Plenty of unsuccessful people want others to succeed. And many successful people want others to fail.

This is a case of a graphic looking like it's true when it really isn't.

Exchange "successful people" with "desirable people" and "unsuccessful people" with "undesirable people" or something similar and you get to a more true statement. Successful and unsuccessful are not defined by how they want others to do nor is it indicative of their mindsets.

This graphic is a projection of what the creator wants to make a point of, but it's just not true and the graphic gives m ore weight to the statement and makes it seem like it is true when it's not.

I can imagine someone taking this same graphic and exchanging "successful people" with Republicans/Democrats/Libertarians/Anarchists and "unsuccessful people" with the group they are trying to denigrate and depending on who is viewing it will aggressively agree or disagree based on who is being maligned as the "hater".

Sorry for the long-winded response. I'm so in love with my own words I'm loathe to edit them!

You got a Point there Roy!
But to me, this Picture works as a reminder.
I want to become Successful. And as we all know, Success means something different, to all of us. To me, Success means: Progress, Happiness, and Health.
The only thing I can say is, that helping others made me coming closer to my Goals :).
It´s a principle which rather functions as a guide, then a fact.

... and don´t worry, we all love our own words, in a way :D
Feeback´s like your´s vitalise this Community!

All the best,
Chris

Totally understood. The picture works absolutely well when taken from your definition of success. Just pointing out that the commonly thought of definition, which is exemplified by the trending page on Steemit, is one of financial success.

Moreover, just wanted to make the general point of using meme like graphics to make points. They just seem more truthful than their actual meaning dictates.

It's almost like a meme can be a logical fallacy all on it's own. Like an "appeal to authority" fallacy. If it's on a professional looking graphic, it's gotta be true!

All the best to you, as well, Chris,
Roy

Roy, the Illustrator :D
You are absolutely right!
The Marketing Industry love´s this thinking mistake. I mean, the actor wears a doctor´s code, for a good reason, while he´s talking about how great this specific toothbrush is.

THIS PPICTURE IS SO TRUE!!!

hehe ... It helped me a lot :)

What is "success"?

Whatever gives you a feeling of fulfillment.

Of course, Success means something different, to all of us - or at least it should.

To me, Success ​means: Progress, Happiness, and Health. ;)
What about you ?


schadenfreude

haha... den habe ich mir gespeichert :D

This meme really does spell out how "cooperation" is superior to "competition". Competition is adversarial, warlike and primitive. Thanks for the post!

I think it´s much rather about, how we handle competition. ;)
I have to thank you, for your great feedback!

All the best,
Chris

Just after I finished to read this post I realized it was yours... I wasn't amazed, your posts are always awesome @andrarchy.

TY for your work, keep it going !

Thanks! Glad you liked it and glad you like my work generally :)

👍that's true comparison @andrarchy

Non-zero-sum is one very very important insight, as you observe in the article. However, the amusing thing that I have observed about markets is that there is competition in the service of consumers, yes, and therefore in satisfying social need, of course - yet there is vastly more cooperation in market economies than there is competition. Just go read (or watch) I, Pencil as a poignant illustration.

This is where I feel Austrian economists and their supporters have an amazing upper-hand, in having an economic view that includes the whole web of collaboration required for the full structure of production. It is also, sadly, where Austrians somehow fail to communicate to the rest of the world - a world dominated by this competition (or worse, theoretical perfect-competition) view of capitalism. But there is a great opportunity there, and I hope that people do a much better job of communicating this holistic attitude towards economies.

It took a while, but I came to understand the deeply beautiful and cooperative nature of markets. They coordinate, without hierarchy, but rather with value-flows between consumers and producers, the whole of human society's labors. They coordinate them in service of the needs of society's members. Until I had that vision of capitalism, it was hard for me to accept, or even entertain free-marketers proposed social theories. But it is beautiful. It manifests the saying "Order is the daughter of anarchy". It is deeply cooperative - even while having a strong competitive element.

I must thank you for all your previous honest work first. As the article said competition is healthy. But elbowing and conflict isn't.
The best strategy is to be wise and outwit the competition and be better than your competition. I remember a story that my professor told us in college. They made three programs to see which one is most successful in a card game. One wouldn't cheat (golden rule), one would cheat all the time (bronze rule), and the third one would be adaptable and would cheat or not cheat depending on the certain circumstances (silver rule). By the end of the test most value was accumulated by silver one. That story teaches us about real life, because most important thing is to adapt to the current situation. I generally go by the golden rule and I'm always ready and happy to pay the price for that (my wife hates me for that). Silver rules persons or companies have wit and cunning to be best in terms that there are.
So I would conclude if u have competition it's healthy to fight them fair, and in order to be better than them, you have to outsmart them or occasionally use your position and cheat to survive.
Even Darwin proved that its survival of the fittest.

  ·  8 years ago (edited)

I think a nuance to Darwin's choice of the word "fittest" that most people fail to acknowledge (or notice) is that it doesn't always mean "strongest" or "most aggressive."

I've run into this argument about all competition being bad and was never able to so eloquently dispatch it as handily as you've done here. Thanks for your insight. The notion that competition can only exist in the context of vanquishing one's opponent is ludicrous to put it politely. I've tried using sports analogies, but I haven't found that people respond well to those on this particular subject.

Thanks! Yeah that argument always frustrated me too

Brilliant post, friend. I loved your analysis about how not all competition is a non-zero-sum game, and some "competition" can be friendly and healthy. I also remember listening to Peter Thiel's speeches. I loved his idea to be so unique and differentiated, that you literally don't have completion, and instead you collaborate with others. I see that as a viable approach to the Steemit platform.

Good shit. Keep it up.

What a great post ...hopefully all the out of control flagger's will read this and realize that their jealous flagging will hold no benefit to them.
LETS LIFT EACH OTHER UP!!! and we will all win!! Work together, strength in numbers! I tell all my friends to try out Steemit! Even those in my same general genre, the more we grow the more we will all be worth.

I did get one flag :/

All for one and one for all! Thanks for the article and work. Namaste :)

Briefly: The Steemit principle: One hand washes the other and everyone wins.

Really? Where do you see that principle being employed?

The Steemit principle: be famous and get money for name recognition, then cash out fast.

Can I have a Cookie as well? I really like Cookies...

A rideable cookie? Sure.

I'm sorry but I could not stand by at let this happen. That is obviously a Ritz cracker not a cookie XD

Good

Good or Bad? I prefer Batman. Sounds bad but is good. Be Batman

Competition is not necessarily bad, but if you can find a unique product or a particular niche, you're probably better off than most competition-based companies.

Until someone decides to compete with you. The first car company did not outlast Ford.

It's called Blue Ocean Strategy, and yes, it's a great way to circumvent a saturated market filled with entrenched competition. But as laconicflow says, it only works for a little while. A lot if times the bigger players will begin to imitate you and grab the little niche market you've created for yourself.

  ·  8 years ago (edited)

customer always win 8]

I love this site! Although I see a lot of people on it for the WRONG reasons.. To get instant publicity without working(writing) for it and others because they jumped on the band wagon of crypto.. Well I truly HOPE us the ones that believed in true decentralization Benefit in the end! Love , Blockchainjen

There are many types of competition, healthy competition is encouraged and not healthy.
Dirty tricks , rip-off .....

imo competition is a good thing! great post!

Bad, competition is for losers.
The winners are the ones who differentiate themselves to have no competition. This is true capitalism!

Competition is great motivation! And provides the best product at the cheapest price.

no one can compete against Steemit! Steemit is the best.

It's a good point that just because the word "competition" can describe them both, that it isn't really the same thing. When companies compete against each other, it's really just that their feet are held to the fire to be the best versions of themselves. It isn't as though they're pulling and tugging and adding or subtracting from each other.

It's more like trying to beat a high score in pinball; it's still a challenge of you against you, you're having the same experience you'd have if there was no "competition", you just have a motivation that wasn't there before.

Language is imperfect, it's cool to notice the times where it conflates two different things like this.

In my opinion competition is good because it makes you know your limits and having an adversary is necessary to improve yourself. In some sense an adversary will help you more than a friend, because only in bad and stressful situations you can achieve your maximum potential.

Nice post and video @andrarchy

I just don't believe that being a losser is unacceptable, it might mean that as a person we need to improve ourselves. It's a challenging situation that everyone should learn how to accept and learn from it. There's a saying that "It's not important wether you win or lose the game but what's important is how you play it".

It is bad from scientific point of view, according to most recent up to date research in human behavioral biology and evolution.
Check this one up:

There are, also some very good YT uploaded lectures by prof Robert Sapolsky from Stanford University in Human Behvioral Biology. I would recommend

You raised a lot of very good points that make me rethink about my stance about competition. I hope you don't mind, but I've actually written something similar, albeit from a different perspective, some time ago https://steemit.com/thoughts/@jedau/the-wisdom-of-non-competitiveness

I know there's no competition between the two posts, but looking at the interaction, there's clearly one winner. It's funny because an article about the merits of competition wins out against non-competitiveness. There's a lot that could be said about that.

Definitely interesting to see an economist viewpoint of competition. I like how you pointed out that Steemit is designed to foster a non-zero-sum competition. Somehow, I wanted to allude to the same conclusion, but from a different starting point.

I hope it doesn't come across that my belief of competition as "bad". Far from it. I lean towards the benefit of competition in terms of improvement between the competing parties. What I merely posited is what if we look at it from a different perspective. In a way, it's ironic because it feels like I'm competing with a more widely adopted notion of competition.

I tip my hat to you, and I congratulate you on the success of this post.

Great use of examples. Competition is a highly debated topic. On one side, it's considered healthy to build character and on the other hand it is seen as a way to divide individuals.

I hope someone can clarify something. Steemit's rewards come from the same pool. People compete for that pool. It is limited on a daily basis. So it is a zero-sum game, is it not? In fact, if you write two posts at the same time, both very successful, your second post will compete with your own first post. Is this correct?